Indonesia's current account deficit (CAD) in 2020 narrowed from the CAD recorded in 2019.

Bank Indonesia (BI) noted that CAD over the past year amounted to US$4.7 billion, equivalent to 0.4 percent of the Gross Domestic Product (GDP), improving compared to 2019 with a deficit of US$30.4 billion (2.72 percent of GDP).

Executive Director, Head of the BI Communication Department, Erwin Haryono, said that the narrowing of CAD is in line with stagnant trade performance, exports, and imports, in line with the COVID-19 pandemic.

"Exports are limited due to weak demand from trading partner countries. Imports are also still held back due to weak domestic demand," Erwin said in Jakarta on Friday (19/2).

Meanwhile, capital and financial transactions in 2020 will still record a surplus, amounting to US$7.9 billion. The surplus is in line with the inflow of foreign capital into the domestic financial market, especially in the second half of last year.

Erwin said that foreign investors' continued entry into the domestic financial market showed their optimism for maintaining domestic economic recovery.

"Also, the capital and financial account surplus is also supported by reduced global financial market uncertainty, especially in the second semester of 2020," said Erwin.

With these developments, the Indonesian Balance of Payments (NPI) throughout 2020 continued to print a surplus, continuing the surplus trend in the previous year.

BI noted the balance of payments surplus over the past year was US$2.6 billion. Although this is a surplus, this is smaller than the 2019 balance of payments surplus of US$4.7 billion.